South Africa’s Inter-governmental Fintech Working Group (IFWG) recently accepted Mercury FX, a UK-based e-money firm, into the first cohort of its regulatory sandbox. The firm, which harnesses the Ripplenet blockchain, says it wants to demonstrate its technology’s ability “to shorten the money transfer window to only minutes.”
Fast and Low Remittances
Further, Mercury FX, which claims to have piloted the use of this technology in the Philippines and Mexico, says its solution, aided by the XRP token, will enable low-cost cross-border remittances. In addition to Ripple, the firm also reveals it will be partnering with Valr (a local crypto exchange) towards this objective.
However, according to a statement issued by IFWG, Mercury FX’s acceptance into “sandbox does not indicate a change in a firm’s licensing status or signal tacit or implicit approval of the product or service under consideration.” This, therefore, means Mercury’s test run of its service will still be “subject to certain limits prescribed by the relevant authorities.” Also, the testing “will in the main be done in terms of the South African Exchange Control Regulations.”
Meanwhile, the IFWG statement also shares details of the working parameters to which Mercury FX will adhere to. The statement reads:
Mercury is testing the regulatory treatment, and associated regulatory reporting implications and obligations, of crypto assets (specifically XRP) being used for effecting low-value cross-border remittances between South Africa and the United Kingdom and vice versa.
The IFWG adds that at the conclusion of testing, which may last six months, “the insights gained should provide clarity on how such innovation could be treated from a regulatory perspective in future, thereby promoting regulatory certainty.”
Five Crypto Entities Accepted
According to the IFWG, a total of 52 applications were received during the application window for the Regulatory Sandbox which closed on 15 May 2020. However, only six applications got the nod and five of these are blockchain and crypto-related solutions.
From the five, Xapo Technologies, just like Mercury FX, will also be testing the regulatory treatment of XRP for low-value cross-border remittances between South Africa and the UK. On the other hand, Centbee will be “testing the regulatory treatment of crypto assets (specifically BTC and BSV) for low-value cross-border remittances between South Africa and Ghana and vice versa.”
What are your thoughts on IFWG’s approval of applications by firms that use cryptocurrencies? You can share your thoughts in the comments section below.